Archive for August, 2008

August 31, 2008

The real cost of government is measured by what government spends, not by the receipts labeled taxes. The goods and services it buys are not available for other use…Suppose government spends $400 billion and raises $350 billion in funds labeled taxes. Who do you suppose pays for the $50 billion difference? The tooth fairy? Hardly. You do.
-Milton Friedman

August 26, 2008

we are growth investors, and waste is certainly a growing market. appears they are making good share gains, but perhaps it’s more a product of a rising tide lifting all cephalopods?

Not to get our cephalopods and crustaceans crossed up, but it is exactly a case where a rising tides lifts all (underwater) boats (subs?). But is also a case of share gains against incumbent land-based competitors. So it’s two cases, both supporting our case that crustaceous waste management is poised to clamp down on the market. So three cases in all. Case closed.

Recommendation: Eat as many of them as you can before they eat your lunch.

August 25, 2008

Previously we have covered the impending secular shift away from the age of Man towards the age of Cephalopod, as well as exploring related investment strategies. One aspect left unexplored waste management, an important industry on land due to increasing “green” pressure in the context of population growth. For an underwater kingdom, waste management is even more important due to the ways in which toxins can spread out if left uncontained.

There are two species who are most likely to benefit from the surgence of cephalopodic reign — crabs and lobsters. Both are naturally suited towards grabbing share in waste management. Their defensive position (both in the form of arms and claws) has allowed them to maintain a vice-like grip on underwater waste management. As the tides turn against man, crabs and lobsters will likely be able to literally grab share in the waste space.

Recommendation: While Waste Management (NYSE: WMI) dickers around contemplating mergers, the crustaceous players are doing the sensible thing and explicitly seizing waster receptacles and routes. We see crabs and lobsters as likely to continue to take share in advance of dawn of the Cephalod Era; short incumbent land-based waste-managed companies.

August 21, 2008

And they have an idea on how to do it — a flash animation on their site that is certainly not suitable for epileptics. If you watch the flash animation you can see just how amazing IDEA will be, given that the intro takes more than 15 seconds to finish, features circa 1999 compression artifacts in the images and is an indecipherable stream of random images and numbers. This is going to be so much better than EDGAR!!!!!

August 20, 2008

This is an actual link in the first half dozen stories on WSJ.com right now. Wachovia Unloads Troubled Loans. You might think, gentle reader, that this will give you some insight into Wachovia and be worth reading. You would be wrong, as the teaser informs us

A venture headed by LandCap is buying $40 million in troubled land and construction loans from Wachovia. 5:01 a.m.

$40 million in loan assets? Really???? Wachovia (NYSE: WB) is a company with hundreds of billions of loan assets. This is de minimis with respect to de minimis. What’s next a piece on a $30,000 legal bill pertaining to whether HR was allowed to use copyrighted clipart in company wide emails about Sexual Harassment training??

Recommendation: Convince the world to be long microreporting like this; then, while everyone’s analysis is suffuse with microdetails, focus on the big picture.

August 19, 2008

Even though you probably should. I commend you for trying, and we all know that an A for effort is worth $0, so don’t spend that all in one place.

For the rest of you, congratulations, I hope you know that passing a CFA Level II or III exam might possibly have been a good call. It also might possibly turn out to have been an awful call. Consider this: I wonder how much the 40 year old version of you will pay to be able to spend 150 hours in your mid-twenties again. You can buy that with all the extra money you make from being a CFA right? But it was all worth it, definitely worth it. Keep telling yourself that.

August 15, 2008

Carey, unnerved by an affair that had suffered through weeks of volatility, walked unsteadily, her dress etching complex runes in the fine patina of dust along the antiquated floor, to a rose-scented box of love letters in a vain attempt to find solace, like a security fund struggling to find liquidity in the US sub-prime mortgage market.

August 11, 2008

With the Olympic background, the Georgia-Russia-South Ossetia squaredance has been getting a lot less attention than it should. Most people don’t even know that Georgia isn’t even in the United States, much less how important South Ossetia is to ensuring that enriched uranium remains affordable for blue-collar Americans. Just as the demand for gas picks up when the so-called “driving season” officially opens, so to does the demand for enriched uranium pickup in the so-called “atomic bomb hobbyist season”. It starts in just one week, with it’s tradititional commencement on the third Monday of August.

Unlike with gasoline, we are confident that there will be no actions in Government designed to help affected consumers, already laden with credit card debt, mortgage debt, second mortgage debt, third mortgage debt, car payments, tv payments, home theater payments, debt surrounding the bowling alley they had installed in their ranch house, inflation, a weak labor market, and Exxon-Mobil’s extortative pricing practices. Expect to see some atomic bomb hobbyists forced to switch to less expensive substitutes, like trinitrotoluene, napalm, or even baking soda.

Recommendation: There will be demand destruction for all enriched uranium stations, in addition to a squeeze on their margins. Short them, but maintain a nimble predisposition. Long-term, it’s harder to get a feel for the direction enriched uranium prices will take. The war situation is bumping up prices now, but if South Ossetia links up with North Ossetia and becomes one with Russia, the market price will likely decrease. But if the land remains in a state of anarchy without actually being at war, still a pseudo-province in Georgia, enriched uranium prices will likely come in back to recent levels.

August 8, 2008

Ratings Rationale: Some people can pull off doing everything. Student government, head of the cheerleading squad, phi beta kappa, kappa kappa gamma, Big Sister, 4.0 GPA, pep squad, dance squad, hybrid pep-dance squad, dance team, song girl, TA, model, campus tour guide, designated driver, cocaine addict and the world’s best GF. But for most people who aren’t Melissa, the result is a total disaster…Citi is that disaster!

Citi, girl, I’m really not trying to pick on you but what do you do? Everything? How is that working out for you!?! Credit cards, banking, i-banking, trading, brokering, creepy advertising surrounding a stodgy British pedophile with a magic umbrella?!? ((Masculine Editor’s Note: Travelers P&C is no longer part of Citigroup)

Citi, I know you think you have a lot to offer, and you try so hard which is kinda cute, but I just have to think about myself — I wouldn’t want to rely on you for anything and that’s the sad truth. People have been saying this about you for awhile, they don’t want a friend who is a supermarket, they want one that is an organic farmer’s market that charges ridic premiums and is extremely fashionable to be seen with.

And don’t even get me started on what buying back all those Auction Rate Securities is going to do to your going-out ability. You know those mature never, right? Just like all the boys you have been slutting it out with.

I hate having to do this I really do, because I’m not a mean person at all, everyone who knows me knows how nice I am. I’m sorry, it’s my job. Citi, I am downgrading you two notches from Best Friend Forever But Also a Slut to Whore.

Ratings Methodology:
Hey everyone! It’s me, Melissa Moody…not that other Moody’s you have been reading about. Actually that’s why I’m here I’m just so sick and tired of that other Moody! Their ratings stink, and they don’t know nearly as much as I do about debt, it’s true, I’m maxed out on 4 out of 7 credit cards I know I have a problem but I just can’t stop,ha ha. I can do a better job than Moody’s and that is what I’m gonna do! And let’s face it, their old ratings were too complicated. I mean Aa3, Baa1, Caa2, B1 who knows what that means? My ratings will be simple:

August 7, 2008

Attractive people have a unique arbitrage opportunity. All thing being equal, they are more likely to be hired for a given position than a less attractive peer. But all things remaining equal, they are also more likely to be sexually harassed by their superiors than a less attractive comparable employee. This gives attractive people the opportunity to “double dip,” so to speak. They can gain employment and the ensuing compensation by virtue of their looks; then they can compound their returns by getting sexually harassed and filing multi-million dollar suits[.]

While we stand by this analysis, it comes with a caveat that, like most things requiring logic or fairness or human rights, it does not apply in Russia. There have been only 2 successful sexual harassment cases in Russia since it was the Soviet Union, and a recent suit was dismissed thusly by the ruling judge:

The judge said he threw out the case not through lack of evidence but because the employer had acted gallantly rather than criminally.

“If we had no sexual harassment we would have no children,” the judge ruled.

And then some amazing facts which support my contention that Russia is a place to fear:

According to a recent survey, 100 per cent of female professionals said they had been subjected to sexual harassment by their bosses, 32 per cent said they had had intercourse with them at least once and another seven per cent claimed to have been raped.

Eighty per cent of those who participated in the survey said they did not believe it possible to win promotion without engaging in sexual relations with their male superiors.

Women also report that it is common to be browbeaten into sex during job interviews, while female students regularly complain that university professors trade high marks for sexual favours.

Recommendation: Russian firms can arbitrage sexual harassment arbitrage by hiring exclusively “office hottie” caliber employees. They get full benefit for the 20% bump in productivity without being subject to the increase in sexual harassment related legal costs. The play for women and non-whites and people with ethics is to remain away from Russia.

August 5, 2008

Recommendation: A classic case of Maybe Not Marketing. With its dark humor, it plays on the learned sophistication of the Scotch drinking demographic with a call to a pivotal moment in American history. But sometimes humor can be too dark.

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